What Would GDP Be Without the Fed?

A better than expected GDP report spurred markets higher Thursday (3Q GDP Report - from the Bureau of Economic Analysis).

Two thirds of the growth was driven by “Motor Vehicles & Parts”, “Residential Fixed Investment” and “Federal Government” - that is the sale of autos and homes spurred by Cash For Clunkers, The 1st Time Home Buyer Tax Credit and low mortgage rates, and increased government spending.

Wells Fargo’s Chief Economist John Silva had this to say:

Big contributors were consumer spending on autos - cash for clunkers - federal government, inventories and housing - tax credit….. Core issue: how much of this is sustainable without Fed programs?

Comments

[GMak:]

Goldman did it AGAIN!

GDP minus "Cash for Clunkers" which represent 1.7% of the 3.5% growth in 3Q. However, US brands only represent 38% or so where the rest are mostly Japanese and Korean ==> 3.5% Gov't reported (inflated) number minus 0.65% (38% of the 1.7%) ~ Goldman's 2.9% DEAD ON...

Our government borrowed the accounting software from the "too big to fail" banks; the result is sweeping portions of Japan's and Korea's 3Q GDP to its own... What FASB is that?

Oct 29 08:06 PM

[Options Tra...:]

Anyone still not convinced that the recession is over? :)

Oct 29 10:05 PM

[Smarty_Pants:]

Cash for Clunkers (CFC) - loose translation: "Destroy perfectly good used vehicles so GM can build new replacement vehicles."

Anyone remember the book "Brave New World"?

"Ending is better than mending.* "

* A government slogan encouraging people to throw away old possessions and buy new ones, thus theoretically keeping the global economy strong.

Reality is even worse than the book. The gub'mint only handed out slogans in the book, not the money to spend like we with CFC.

If you want a forecast for future GDP try reading some predictions by Gerald Celente of the Trends Research Institute:

trendsresearch.com/for...

Look over his past predictions and see how amazingly well he has done at hitting the nail on the head, then read what he thinks about the near future.

www.infowars.com/celen...

The gub'mint can massage the numbers all they want. Until and unless they stop printing money to prevent failing businesses to go under, things will continue to worsen over time.

Count on it.

Oct 30 12:18 AM